WESTSTAR FINANCIAL SERVICES CORPORATION
79 Woodfin Place
Asheville, North Carolina 28801
(828) 252-1735
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held
April 20, 2004
NOTICE is hereby given that the Annual Meeting of Shareholders of Weststar
Financial Services Corporation (the "Company") will be held as follows:
Place: Renaissance Asheville Hotel
Asheville, North Carolina
Date: April 20, 2004
Time: 3:00 p.m.
The purposes of the meeting are:
1. To elect three (3) members of the Board of Directors for three (3)
year terms and one (1) member of the Board of Directors for a two
(2) year term.
2. To ratify the appointment of Dixon Hughes PLLC as the Company's
independent public accountants for 2004.
3. To transact any other business that may properly come before the
meeting.
You are cordially invited to attend the meeting in person. However, even if you
expect to attend the meeting, you are requested to complete, sign and date the
enclosed appointment of proxy and return it in the envelope provided for that
purpose to ensure that a quorum is present at the meeting. The giving of an
appointment of proxy will not affect your right to revoke it or to attend the
meeting and vote in person.
By Order of the Board of Directors
/s/ Randall C. Hall
Randall C. Hall
Executive Vice President & Secretary
March 11, 2004
WESTSTAR FINANCIAL SERVICES CORPORATION
79 Woodfin Place
Asheville, North Carolina 28801
(828) 252-1735
PROXY STATEMENT
Mailing Date: On or about March 11, 2004
ANNUAL MEETING OF SHAREHOLDERS
To Be Held
April 20, 2004
General
This Proxy Statement is furnished in connection with the solicitation of
the enclosed appointment of proxy by the Board of Directors of Weststar
Financial Services Corporation (the "Company") for the 2004 Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held at the Renaissance
Asheville Hotel, Asheville, North Carolina, at 3:00 p.m. on April 20, 2004, and
any adjournments thereof.
Solicitation and Voting of Appointments of Proxy; Revocation
Persons named in the appointment of proxy as proxies to represent
shareholders at the Annual Meeting are W. Edward Anderson, Randall C. Hall and
Carol L. King. Shares represented by each appointment of proxy, which is
properly executed and returned, and not revoked, will be voted in accordance
with the directions contained in the appointment of proxy. If no directions are
given, each such appointment of proxy will be voted FOR the election of each of
the four (4) nominees for director named in Proposal 1 below and FOR Proposal 2.
If, at or before the time of the Annual Meeting, any nominee named in Proposal 1
has become unavailable for any reason, the proxies will have the discretion to
vote for a substitute nominee. On such other matters as may come before the
meeting, the proxies will be authorized to vote shares represented by each
appointment of proxy in accordance with their best judgment on such matters. An
appointment of proxy may be revoked by the shareholder giving it at any time
before it is exercised by filing with Randall C. Hall, Secretary of the Company,
a written instrument revoking it or a duly executed appointment of proxy bearing
a later date, or by attending the Annual Meeting and announcing his or her
intention to vote in person.
Authorization to Vote on Adjournment and Other Matters
Unless the Secretary of the Company is instructed otherwise, by signing an
appointment of proxy, shareholders will be authorizing the proxyholders to vote
in their discretion regarding any procedural motions which may come before the
Annual Meeting. For example, this authority could be used to adjourn the Annual
Meeting if the Company believes it is desirable to do so.
Adjournment or other procedural matters could be used to obtain more time before
a vote is taken in order to solicit additional appointments of proxy to
establish a quorum or to provide additional information to shareholders.
However, appointments of proxy voted against the Proposals will not be used to
adjourn the Annual Meeting. The Company does not have any plans to adjourn the
meeting at this time, but intends to do so, if needed, to promote shareholder
interests.
Expenses of Solicitation
The Company will pay the cost of preparing, assembling and mailing this
Proxy Statement and other proxy solicitation expenses. In addition to the use of
the mails, appointments of proxy may be solicited in person or by telephone,
without additional compensation, by the officers, directors and employees of the
Company and its wholly-owned subsidiary, The Bank of Asheville (the "Bank").
Record Date
The close of business on February 20, 2004, has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting. Only those shareholders of record
on that date will be eligible to vote on the Proposals described herein.
Voting Securities
The voting securities of the Company are the shares of its common stock,
par value $1.00 per share, of which 9,000,000 shares are authorized, and
preferred stock, no par value, of which 1,000,000 shares are authorized. At
December 31, 2003, there were 1,166,208 shares of common stock and no shares of
preferred stock outstanding. There are approximately 800 holders of record of
the Company's common stock.
Voting Procedures; Quorum; Votes Required for Approval
Each shareholder is entitled to one vote for each share held of record on
the Record Date on each director to be elected and on each other matter
submitted for voting. In accordance with North Carolina law, shareholders will
not be entitled to vote cumulatively in the election of directors at the Annual
Meeting.
A majority of the shares of the Company's common stock issued and
outstanding on the Record Date must be present in person or by proxy to
constitute a quorum for the conduct of business at the Annual Meeting.
Assuming a quorum is present, in the case of Proposal 1 below, the four
(4) nominees receiving the greatest number of votes shall be elected.
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In the case of Proposal 2, for such Proposal to be approved, the number of
votes cast for approval must exceed the number of votes cast against the
Proposal. Abstentions and broker nonvotes will have no effect.
Ownership of Voting Securities
As of December 31, 2003, no shareholder known to management owned more
than 5% of the Company's common stock. As of December 31, 2003, the beneficial
ownership of the Company's common stock, by directors and executive officers
individually, and by directors and executive officers as a group, was as
follows:
AMOUNT AND
NAME AND ADDRESS OF NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1)(2) OF CLASS (3)
---------------- ---------------- ------------
W. Edward Anderson 50,198 3.54
Asheville, NC
M. David Cogburn, M.D 32,116(4) 2.26
Asheville, NC
Steven D. Cogburn 4,180(5) *
Asheville, NC
G. Gordon Greenwood 36,660 2.58
Asheville, NC
Patricia P. Grimes 480 *
Asheville, NC
Randall C. Hall 17,815 1.51
Asheville, NC
Darryl J. Hart 19,671 1.39
Asheville, NC
Carol L. King 25,393(6) 1.79
Asheville, NC
Stephen L. Pignatiello 25,051(7) 1.77
Asheville, NC
Laura A. Webb 16,703(8) 1.18
Asheville, NC
David N. Wilcox 24,174 1.70
Asheville, NC
All Directors and
Executive Officers as a Group 252,441 19.81
(11 persons)
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(1) Except as otherwise noted, to the best knowledge of the Company's
management, the above individuals and group exercise sole voting and investment
power with respect to all shares shown as beneficially owned other than the
following shares as to which such powers are shared: Dr. Cogburn - 450 shares;
Mr. Cogburn - 290 shares; and Ms. Webb - 1,306 shares.
(2) Included in the beneficial ownership tabulations are the following
options to purchase shares of common stock of the Company: Mr. Anderson - 11,325
shares; Dr. Cogburn - 6,098 shares; Mr. Greenwood - 26,136 shares; Mr. Hart -
11,325 shares; Ms. King - 11,325 shares; Mr. Pignatiello - 11,325 shares; Ms.
Webb - 6,098 shares; and Mr. Wilcox - 11,325 shares.
(3) The calculation of the percentage of class beneficially owned by each
individual and the group is based on a total of 1,166,208 shares of common stock
outstanding as of December 31, 2003 and the number of options capable of being
exercised by each person or the group before March 1, 2004.
(4) Includes 450 shares owned by Dr. Cogburn's spouse and as custodian for
minor children.
(5) Includes 290 shares owned by Mr. Cogburn as custodian for minor
children.
(6) Includes 145 shares held by Ms. King as custodian for a minor child.
(7) Includes 8,090 shares held by Mr. Pignatiello as custodian for minor
children.
(8) Includes 1,306 shares owned by Ms. Webb's spouse.
Section 16(a) Beneficial Ownership Reporting Compliance
Directors and executive officers of the Company are required by federal
law to file reports with the Securities and Exchange Commission ("SEC")
regarding the amount of and changes in their beneficial ownership of the
Company's common stock. To the knowledge of the management of the Company based
upon information supplied to the Company by the directors and executive
officers, all required reports of directors and executive officers of the
Company have been timely filed, except one such report of Dr. M. David Cogburn
which was filed one business day after the filing deadline.
PROPOSAL 1: ELECTION OF DIRECTORS
The Bylaws of the Company provide that its Board of Directors shall
consist of between eight (8) and twelve (12) members, as determined by the Board
of Directors or the shareholders, and, if there are nine (9) or more directors,
that they shall be classified into three groups with staggered terms of three
(3) years in as equal numbers as possible. The Board of Directors has set the
number of directors of the Company at ten (10). The following directors whose
terms expire at
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the Annual Meeting have been renominated to three-year terms by the Nominating
Committee of the Board of Directors:
Position(s) Director Principal Occupation
Name and Age Held Since and Business Experience During Past Five Years
- ------------- ---- ----- ----------------------------------------------
W. Edward Anderson Director 1997 Retired Director, Hasco Mold Bases, Asheville, NC
(64)
G. Gordon Greenwood Director 2000 President and Chief Executive Officer of the Company and
(57) the Bank, January, 2000-Present; Regional Market Manager,
RBC Centura Bank, Asheville, NC, 1996-2000
Darryl J. Hart Director 1997 Vice President & General Manager, Hart Funeral Services,
(42) Inc., Asheville, NC
The following director was appointed to fill the remaining term of a previous
director. Pursuant to North Carolina law, his term expires at the Annual
Meeting. He has been renominated to a two-year term.
Position(s) Director Principal Occupation
Name and Age Held Since and Business Experience During Past Five Years
- ------------- ---- ----- ----------------------------------------------
Steven D. Cogburn Director 2003 Attorney and Partner, Cogburn, Goosman, Brazil and Rose,
(47) P.A, Asheville, NC
Incumbent Directors
The Company's Board of Directors includes the following directors whose
terms will continue after the Annual Meeting. The four (4) nominees and the
incumbent directors listed below also serve as directors of the Bank:
Director Term Principal Occupation
Name and Age Since Expires and Business Experience During Past Five Years
- ------------ ----- ------- ----------------------------------------------
Patricia P. Grimes 2003 2005 General Manager, Harry's Cadillac Pontiac GMC, Ashville, NC
(51)
Carol L. King 1997 2005 CPA and President, Carol L. King & Associates, P.A.,
(58) Asheville, NC
David N. Wilcox 1997 2005 Vice President, Wilcox Travel Agency, Inc., Asheville, NC
(43)
M. David Cogburn, M.D. 1999 2006 President, Carolina Mountain Dermatology, P.A., Arden, NC
(48)
Steven L. Pignatiello 1997 2006 President, P Comms International, LLC, Asheville, NC (Wine
(44) Importer)
Laura A. Webb 1999 2006 President, Webb Investment Services, Inc, Asheville, NC, Vice
(44) President, R. Stanford Webb Agency, Asheville, NC
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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE FOUR
NOMINEES FOR DIRECTOR OF THE COMPANY FOR THE TERMS INDICATED.
Director Relationships
One family relationship on the Board of Directors exists. M. David
Cogburn, M.D. and Steven D. Cogburn are brothers. No director is a director of
any corporation with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934 (the "Exchange Act") or subject to the
requirements of Section 15(d) of the Exchange Act, or any company registered as
an investment company under the Investment Company Act of 1940.
Meetings and Committees of the Board of Directors
The Company's Board of Directors held twelve (12) regular meetings in
2003. All directors attended 75% or more of the aggregate number of meetings of
the Board of Directors and any committees on which he or she served, except for
Ms. King whose absences were due to medical reasons. The Board of Directors
intends to meet monthly in 2004.
It is the policy of the Company that directors attend each annual meeting
and any special meetings of the Company's shareholders. Eight (8) of the
Company's nine (9) directors attended the 2003 Annual Meeting of Shareholders.
The Board of Directors has appointed several standing committees including
an Audit Committee, Compensation/ Nominating Committee and Executive Committee.
Those committees will also meet on a regular basis in 2004. The composition of
each committee is as follows:
Compensation/Nominating
Audit Committee Committee Executive Committee
--------------- --------- -------------------
W. Edward Anderson W. Edward Anderson W. Edward Anderson
M. David Cogburn, M.D. M. David Cogburn, M.D. M. David Cogburn, M.D.
Darryl J. Hart G. Gordon Greenwood* G. Gordon Greenwood
Carol L. King Carol L. King Carol L. King
Laura A. Webb David N. Wilcox David N. Wilcox
* Non-voting member
Nominating Committee
The Company has a standing Nominating Committee. The duties of the
Nominating Committee are: (i) to assist the Board, on an annual basis, by
identifying individuals qualified to become Board members, and to recommend to
the Board the director nominees for the next annual meeting of shareholders;
(ii) to assist the Board in the event of any vacancy on the Board by identifying
individuals qualified to become Board members, and to recommend to the Board
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qualified individuals to fill any such vacancy; and (iii) to recommend to the
Board, on an annual basis, director nominees for each committee of the Board.
The Company is not the member of any exchange, however, the Nominating
Committee members are "independent" as defined by Nasdaq listing standards. The
bylaws of the Company state that candidates may be nominated for election to the
Board of Directors by the Nominating Committee or by any shareholder of the
Company's common stock. It is the policy of the Nominating Committee to consider
all shareholder nominations. Shareholder nominations must be submitted to the
Nominating Committee in writing on or before September 30th of the year
preceding the Annual Meeting at which the nominee would stand for election to
the Board of Directors and must be accompanied by each nominee's written consent
to serve as a director of the Company if elected. The bylaws of the Company
require that all nominees for director, including shareholder nominees, have
business, economic or residential ties to the Company's market area and have
owned at least 1,000 shares of the Company's common stock for a period of twelve
(12) months preceding the date of the nomination. In evaluating nominees for
director, the Nominating Committee values community involvement and experience
in finance or banking including prior service as an officer or director of an
entity engaged in the financial services business, although such experience is
not a prerequisite for nomination. The Nominating Committee has adopted a formal
charter, which is available at http://www.bankofasheville.com.
Report of Audit Committee
The Company has a standing Audit Committee. The Audit Committee is
responsible for receiving and reviewing the annual audit report of the Company's
independent auditors and reports of examinations by bank regulatory agencies,
and helps formulate, implement, and review the internal audit programs of the
Company and the Bank. The Audit Committee assesses the performance and
independence of the Company's independent auditors and recommends their
appointment and retention. The Audit Committee has in place pre-approval
policies and procedures that involve assessment of the performance and
independence of the Company's independent auditors, evaluation of any conflicts
of interest that may impair the independence of the independent auditors and
pre-approval of an engagement letter that outlines all services to be rendered
by the independent auditors.
During the course of its examination of the Company's audit process in
2003, the Audit Committee reviewed and discussed the audited financial
statements with management. The Audit Committee also discussed with the
independent auditors, Dixon Hughes PLLC ("Dixon Hughes"), all matters required
to be discussed by the Statement of Auditing Standards No. 61, as amended.
Furthermore, the Audit Committee received from Dixon Hughes disclosures
regarding their independence required by the Independence Standards Board
Standard No. 1, as amended and discussed with Dixon Hughes their independence.
Based on the review and discussions above, the Audit Committee (i)
recommended to the Board that the audited financial statements be included in
the Company's annual report on Form 10-KSB for the year ended December 31, 2003
for filing with the SEC and (ii) recommended that shareholders ratify the
appointment of Dixon Hughes PLLC as auditors for 2004.
7
The Audit Committee has a written charter, which is reviewed by the
Committee for adequacy on an annual basis.
The Company is not the member of any exchange, however, the Audit
Committee members are "independent" and "financially literate" as defined by the
Nasdaq listing standards. The Board of Directors has determined that Carol L.
King, a member of the Audit Committee, meets the requirements recently adopted
by the SEC for qualification as an "audit committee financial expert." An audit
committee financial expert is defined as a person who has the following
attributes: (i) an understanding of generally accepted accounting principles and
financial statements; (ii) the ability to assess the general application of
Generally Accepted Accounting Principles in connection with the accounting for
estimates, accruals and reserves; (iii) experience preparing, auditing,
analyzing or evaluating financial statements that are of the same level of
complexity that can be expected in the registrant's financial statements, or
experience supervising people engaged in such activities; (iv) an understanding
of internal controls and procedures for financial reporting; and (v) an
understanding of audit committee functions.
Audit Fees
The aggregate fees billed by Dixon Hughes for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2003 and for the review of the financial
statements included in the Company's Quarterly Reports on Form 10-QSB for the
fiscal year ended December 31, 2003 were $32,600. The aggregate fees billed by
Dixon Hughes for professional services rendered for the audit of the Company's
annual financial statements for the fiscal year ended December 31, 2002 and for
the review of the financial statements included in the Company's Quarterly
Reports on Form 10-QSB for the fiscal year ended December 31, 2002 were $27,260.
All such services rendered by Dixon Hughes were subject to pre-approval by the
Audit Committee and no such pre-approvals were waived.
Audit-Related Fees
The aggregate fees billed by Dixon Hughes during the fiscal year ended
December 31, 2003, for assurance and related services that are reasonably
related to the performance of the audit of the Company's financial statements,
but which are not reported under the caption "Audit Fees" above, were $340. Such
fees were for accounting consultations. All such services rendered by Dixon
Hughes were subject to pre-approval by the Audit Committee and no such
pre-approvals were waived. There were no such fees billed by Dixon Hughes during
the fiscal year ended December 31, 2002.
Tax Fees
The aggregate fees billed by Dixon Hughes for tax compliance, tax advice
and tax planning during the fiscal year ended December 31, 2003 were $4,185.
There were no fees billed by Dixon Hughes for such services during the fiscal
year ended December 31, 2002.
8
All Other Fees
There were no additional fees billed by Dixon Hughes during the fiscal
year ended December 31, 2003 or the fiscal year ended December 31, 2002.
This report is submitted by the Audit Committee: W. Edward Anderson, M.
David Cogburn, M.D., Darryl J. Hart, Carol L. King and Laura A. Webb
Director Compensation
Directors received compensation of $100 for every meeting attended during
the fiscal year ended December 31, 2003.
The shareholders of the Company ratified the Weststar Financial Services
Corporation 2001 Nonqualified Stock Option Plan (the "Nonqualified Option Plan")
at the 2001 Annual Meeting of shareholders pursuant to which options on 84,084
shares of the Company's common stock were made available for issuance to members
of the Company's Board of Directors. During 2001, options to purchase 83,160
shares of the Company's common stock were granted under the Nonqualified Option
Plan, all of which have either been exercised or currently remain outstanding.
No options were granted under the Nonqualified Option Plan during the fiscal
year ended December 31, 2003.
Executive Officers
Set forth below is certain information regarding the Company's executive
officers.
Position with
Name Age Company Business Experience
- ---- --- ------- -------------------
G. Gordon Greenwood 57 Director, President and Chief Executive Officer of the Company and
President and the Bank; Regional Market Manager, RBC Centura Bank,
Chief Executive Asheville, 1996-2000.
Officer
Randall C. Hall 38 Executive Vice Executive Vice President, Secretary, and Chief Financial
President, Officer of the Company and the Bank, 1997- Present; Vice
Secretary, and President, Secretary and Chief Financial Officer of Bank
Chief Financial of Granite Corp and Bank of Granite, 1988-1997.
Officer
Board Report on Executive Compensation
The Bank has entered into an employment and change of control agreement
with G. Gordon Greenwood (dated February 9, 2000) as its President and Chief
Executive Officer to establish his duties and compensation and to provide for
his continued employment with the Bank. The employment agreement provides for an
initial term of five (5) years with renewal at the end of the third year and on
each anniversary thereafter for an additional one-year term provided there is an
affirmative decision to renew by the Board of Directors. The employment
agreement provides for an annual base salary of $125,000, and for participation
in other pension and profit-sharing
9
retirement plans maintained by the Bank on behalf of its employees, as well as
fringe benefits normally associated with Mr. Greenwood's position or made
available to all other employees. Additionally, at the sooner to occur of (i) a
"change in control" of the Bank, or (ii) the end of the initial five-year term,
Mr. Greenwood is to receive a 10-year annuity of $40,000 per year. The
employment agreement provides that Mr. Greenwood may be terminated for "cause"
as defined in the employment agreement, and that the employment agreement may
otherwise be terminated, in some cases with certain financial consequences
incurred by the Bank or Mr. Greenwood. The employment agreement provides that
should the Bank terminate the employment agreement other than for cause or
disability within 24 months after a "change in control," or should Mr. Greenwood
terminate the agreement within such 24 months during which his compensation or
responsibilities have been reduced, or his workplace location is moved outside
of Asheville, North Carolina, then he shall receive a lump sum equal to two
hundred ninety-nine percent (299%) of his "base amount" as determined by Section
280G of the Internal Revenue Code of 1986. A "change in control" shall be deemed
to have occurred upon (i) any person becoming the beneficial owner or otherwise
acquiring control, directly or indirectly, of securities of the Bank
representing thirty-five percent (35%) or more of the voting power of the Bank's
now outstanding securities; (ii) the acquisition by any person in any manner of
the ability to elect, or to control the election of, a majority of the directors
of the Bank; (iii) the merger of the Bank into another entity or the merger of
any entity into the Bank without the Bank being the survivor; or (iv) the
acquisition of substantially all of the assets of the Bank by another
corporation.
SUMMARY COMPENSATION TABLE
Annual Compensation Other Compensation
------------------- ------------------
All
Name and Other
Principal Position Year Salary Bonus Options(1) Compensation(2)
- ------------------ ---- ------ ----- ---------- ---------------
G. Gordon Greenwood, 2003 $139,911 $ 0 0 $7,471
President and Chief 2002 135,694 7,850 0 6,376
Executive Officer 2001 126,021 13,000 36,300 7,149
Randall C. Hall 2003 $ 94,426 $ 0 0 $5,768
Executive Vice President 2002 88,962 8,300 0 5,446
and Secretary 2001 81,392 11,000 19,360 6,219
(1) Adjusted for stock dividends.
(2) Includes taxable benefit on group term insurance and 401(k)
contributions.
Stock Options
At the Company's 2001 Annual Meeting, the shareholders approved the
adoption of the Weststar Financial Services Corporation 2001 Incentive Stock
Option Plan, which provides for the issuance of up to 84,084 options to purchase
shares of the Company's common stock. There were no grants of Incentive Stock
Options during the fiscal year ended December 31, 2003.
10
The following table sets forth information regarding option exercises and
option values as of December 31, 2003.
Aggregated Option Exercises in Fiscal Year 2003
And Fiscal Year End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at December 31, Options at December 31,
Shares 2003 (1) 2003 (1)(2)
Acquired Value ---------------------------- -----------------------------
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- ---------------------------- -----------------------------
G. Gordon Greenwood 0 0 26,136 / 43,560 $287,496 / $479,160
Randall C. Hall 0 0 12,883 / 22,176 $141,713 / $243,936
(1) Adjusted for stock dividends.
(2) The Company's stock price on December 31, 2003 was $11.00 per share.
401(k) Savings Plan
The Company has no employees who are not also employees of the Bank.
Hence, the 401(k) Savings Plan of the Bank covers all employees of the Company.
In 1998, the Bank adopted a tax-qualified savings plan (the "Savings Plan")
which covers all current full-time employees and any new full-time employees who
have completed 1,000 hours of service for the employer. Under the savings plan,
a participating employee may contribute up to 15% of his or her base salary on a
tax-deferred basis through salary reduction as permitted under Section 401(k) of
the Internal Revenue Code of 1986 (the "Code"), as amended. The employer may
make additional discretionary profit sharing contributions to the savings plan
on behalf of all participants. Such discretionary profit sharing contributions
may not exceed 6% of the aggregate of the pre-tax base salaries of all
participants in the savings plan and are allocated among all participants on the
basis of the participant's age and level of compensation. Amounts deferred above
the first 6% of salary are not matched by the employer. A participant's
contributions and the employer's matching and profit sharing contributions under
the savings plan will be held in trust accounts for the benefit of participants.
A participant is at all times 100% vested with respect to his or her own
contributions under the savings plan, and becomes 100% vested in the account for
the employer's matching and profit sharing contributions after completing five
years of service with the employer. The value of a participant's accounts under
the savings plan becomes payable to him or her in full upon retirement, total or
permanent disability or termination of employment for any reason, or becomes
payable to a designated beneficiary upon a participant's death. The savings plan
also will contain provisions or withdrawals in the event of certain hardships. A
participant's contributions, vested matching and profit sharing contributions of
the employer, and any income accrued on such contributions, are not subject to
federal or state taxes until such time as they are withdrawn by the participant.
Indebtedness of and Transactions with Management
The Bank has had, and expects to have in the future, banking transactions
in the ordinary course of business with certain of its current directors,
nominees for director, executive officers and
11
their associates. All loans included in such transactions were made on
substantially the same terms, including interest rates, repayment terms and
collateral, as those prevailing at the time such loans were made for comparable
transactions with other persons, and do not involve more than the normal risk of
collectibility or present other unfavorable features.
Loans made by the Bank to directors and executive officers are subject to
the requirements of Regulation O of the Board of Governors of the Federal
Reserve System. Regulation O requires, among other things, prior approval of the
Board of Directors with any "interested director" not participating, dollar
limitations on amounts of certain loans and prohibits any favorable treatment
being extended to any director or executive officer in any of the Bank's lending
matters. To the best knowledge of the management of the Company and the Bank,
Regulation O has been complied with in its entirety.
PROPOSAL 2: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed the firm of
Dixon Hughes PLLC as the Company's independent public accountants for 2004. The
Company's former independent public accountants, Deloitte & Touche, LLP, were
dismissed on April 16, 2002. The former accountant's reports for the past two
years and the interim period between December 31, 2001 and April 17, 2002 did
not contain any adverse opinion or disclaimer of opinion, and were not modified
as to uncertainty, audit scope, or accounting principles. The decision to change
accountants was recommended by the Company's Audit Committee and approved by the
Company's Board of Directors. During the past two fiscal years and the interim
period between December 31, 2001 and April 17, 2002, there were no disagreements
with the former independent public accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which, if not resolved to the former accountant's satisfaction, would
have caused it to make reference to the subject matter of the disagreements in
connection with its report. The Company initially engaged Dixon Hughes as its
independent auditor on April 17, 2002.
A representative of Dixon Hughes PLLC is expected to be present at the
Annual Meeting and available to respond to appropriate questions, and will have
the opportunity to make a statement if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF Dixon Hughes PLLC AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR 2004.
OTHER MATTERS
The Board of Directors knows of no other business that will be brought
before the Annual Meeting. Should other matters properly come before the
meeting, the proxies will be authorized to
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vote shares represented by each appointment of proxy in accordance with their
best judgment on such matters.
PROPOSALS FOR 2005 ANNUAL MEETING
It is anticipated that the 2005 Annual Meeting will be held on a
date during April 2005. Any Proposal of a shareholder which is intended to be
presented at the 2005 Annual Meeting must be received by the Company at its main
office in Asheville, North Carolina no later than November 15, 2004, in order
that such Proposal be timely received for inclusion in the proxy statement and
appointment of proxy to be issued in connection with that meeting. If a Proposal
for the 2005 Annual Meeting is not expected to be included in the proxy
statement for that meeting, the Proposal must be received by the Company by
February 15, 2005 for it to be timely received for consideration. The Company
will use its discretionary authority for any Proposals received thereafter.
SHAREHOLDER COMMUNIICATIONS
The Company does not currently have a formal policy regarding shareholder
communications with the Board of Directors, however, any shareholder may submit
written communications to Randall C. Hall, Corporate Secretary, Weststar
Financial Services Corporation, 79 Woodfin Place, Asheville, North Carolina
28801 whereupon such communications will be forwarded to the Board of Directors
if addressed to the Board of Directors as a group or to the individual director
or directors addressed.
ADDITIONAL INFORMATION
A COPY OF THE COMPANY'S 2003 ANNUAL REPORT ON FORM 10-KSB WILL BE PROVIDED
WITHOUT CHARGE TO ANY SHAREHOLDER ENTITLED TO VOTE AT THE ANNUAL MEETING UPON
THAT SHAREHOLDER'S WRITTEN REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO
RANDALL C. HALL, CORPORATE SECRETARY, WESTSTAR FINANCIAL SERVICES CORPORATION,
79 WOODFIN PLACE, ASHEVILLE, NORTH CAROLINA 28801.
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REVOCABLE PROXY
WESTSTAR FINANCIAL SERVICES CORPORATION
79 Woodfin Place
Asheville, North Carolina 28801
APPOINTMENT OF PROXY
SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints W. Edward Anderson, Carol L. King and Randall C.
Hall (the "Proxies"), or any of them, as attorneys and proxies, with full power
of substitution, to vote all shares of the common stock of Weststar Financial
Services Corporation (the "Company") held of record by the undersigned on
February 20, 2004, at the Annual Meeting of Shareholders of the Company to be
held at Renaissance Asheville Hotel, Asheville, North Carolina, at 3:00 p.m. on
April 20, 2004, and at any adjournments thereof. The undersigned hereby directs
that the shares represented by this Appointment of Proxy be voted as follows on
the proposals listed below:
1. ELECTION OF DIRECTORS: Proposal to elect four (4) directors of the Company
for two and three-year terms as indicated below or until their successors are
duly elected and qualified.
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as indicated to vote for all nominees
otherwise below). listed below
Nominees:
Three-Year Terms
----------------
W. Edward Anderson
G. Gordon Greenwood
Darryl J. Hart
Two-Year Term
-------------
Steven D. Cogburn
Instruction: To withhold authority to vote for one or more nominees, write
that nominee's name on the line below.
-----------------------------------------------------------------------------
2. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS: Proposal to ratify the
appointment of Dixon Hughes PLLC as the Company's independent accountants for
2004.
|_| FOR |_| AGAINST |_| ABSTAIN
3. OTHER BUSINESS: On such other matters as may properly come before the Annual
Meeting, the proxies are authorized to vote the shares represented by this
Appointment of Proxy in accordance with their best judgment.
PLEASE DATE AND SIGN THIS APPOINTMENT OF PROXY ON THE REVERSE SIDE AND RETURN TO
WESTSTAR FINANCIAL SERVICES CORPORATION.
THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY WILL BE VOTED AS DIRECTED
ABOVE. IN THE ABSENCE OF ANY DIRECTION, SUCH SHARES WILL BE VOTED FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED IN PROPOSAL 1 BY CASTING AN EQUAL NUMBER
OF VOTES FOR EACH SUCH NOMINEE, AND FOR PROPOSAL 2. IF, AT OR BEFORE THE TIME OF
THE MEETING, ANY NOMINEE LISTED IN PROPOSAL 1 HAS BECOME UNAVAILABLE FOR ANY
REASON, THE PROXIES ARE AUTHORIZED TO VOTE FOR A SUBSTITUTE NOMINEE. THIS
APPOINTMENT OF PROXY MAY BE REVOKED BY THE HOLDER OF THE SHARES TO WHICH IT
RELATES AT ANY TIME BEFORE IT IS EXERCISED BY FILING WITH THE SECRETARY OF THE
COMPANY A WRITTEN INSTRUMENT REVOKING IT OR DULY EXECUTED APPOINTMENT OF PROXY
BEARING A LATER DATE OR BY ATTENDING THE ANNUAL MEETING AND ANNOUNCING HIS OR
HER INTENTION TO VOTE IN PERSON.
Date:_________________________________, 2004
______________________________________(SEAL)
(Signature)
______________________________________(SEAL)
(Signature, if shares held jointly)
Instruction: Please sign above exactly as your name
appears on this appointment of proxy. Joint owners of
shares should both sign. Fiduciaries or other persons
signing in a representative capacity should indicate the
capacity in which they are signing.
IMPORTANT: TO INSURE THAT A QUORUM IS PRESENT, PLEASE SEND IN YOUR APPOINTMENT
OF PROXY WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. EVEN IF YOU SEND
IN YOUR APPOINTMENT OF PROXY YOU WILL BE ABLE TO VOTE IN PERSON AT THE MEETING
IF YOU SO DESIRE.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD
IN THE ENCLOSED ENVELOPE
2